Income Tax

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Tax [Text Block]

Income Tax

The components of income tax expense are as follows:

	Years Ended December 31,
	2022		2021		2020
	(in thousands)
Current expense:
Federal	$	60,771	$	50,708	$	44,094
State	12,811		9,610		7,822
Total current tax expense	$	73,582	$	60,318	$	51,916
Deferred tax expense (benefit):
Federal	$	(5,156)	$	(5,445)	$	(12,078)
State	(957)		(1,184)		(1,690)
Total deferred tax benefit	(6,113)		(6,629)		(13,768)
Total	$	67,469	$	53,689	$	38,148

Significant components of the Company’s deferred tax assets and liabilities are as follows:

	December 31,
	2022		2021
	(in thousands)
Deferred tax assets:
ACL	$	40,054	$	39,378
Lease liability	14,088		15,973
Deferred compensation	13,619		14,887
Stock options and restricted stock	3,751		3,186
OREO	—		50
Nonaccrual interest	120		118
Unrealized loss on investment securities	164,697		—
Net operating losses and credit carryforwards	2,404		2,898
Other	3,134		1,824
Total deferred tax assets	241,867		78,314
Deferred tax liabilities:
Asset purchase tax basis difference	(4,083)		(5,052)
Right of use asset	(12,792)		(14,510)
FHLB stock dividends	(810)		(810)
Deferred loan fees	(6,205)		(5,957)
Unrealized gain on investment securities	—		(7,254)
Unrealized gain on equity securities	(3,231)		(3,231)
Purchase accounting	(11,106)		(14,211)
Depreciation	(3,112)		(3,304)
Cash flow hedge	(2,767)		(5,280)
Other	(144)		(130)
Total deferred tax liabilities	(44,250)		(59,739)
Net deferred tax asset	$	197,617	$	18,575

A reconciliation of the Company’s effective income tax rate with the federal statutory tax rate is as follows:

	Years Ended December 31,
	2022				2021				2020
	Amount		Percent		Amount		Percent		Amount		Percent
	(dollars in thousands)
Income tax based on statutory rate	$	66,706	21	%	$	53,867	21	%	$	40,402	21	%
Increase (decrease) resulting from:
Tax exempt instruments	(6,864)		(2)	%	(6,306)		(2)	%	(5,987)		(3)	%
Bank owned life insurance	(1,806)		(1)	%	(1,444)		(1)	%	(1,348)		(1)	%
State income tax, net of federal benefit	9,364		3	%	7,892		3	%	4,844		3	%
Other, net	69		—	%	(320)		—	%	237		—	%
Income tax provision	$	67,469	21	%	$	53,689	21	%	$	38,148	20	%

As of December 31, 2022 and 2021, we had no unrecognized tax benefits. Our policy is to recognize interest and penalties on unrecognized tax benefits in “Provision for income taxes” in the Consolidated Statements of Income. There were no amounts related to interest and penalties recognized for the years ended December 31, 2022 and 2021. As a result of recent acquisitions, the Company has net operating loss carryforwards in the federal, Idaho and Oregon jurisdictions of $9.9 million, $5.4 million and $25 thousand, respectively, which begin to expire in 2024.

The Company invests in limited partnerships that operate qualified affordable housing projects to receive tax benefits in the form of tax deductions from operating losses and tax credits. The Company accounts for the investments using the proportional amortization method; amortization of the investment in qualified affordable housing projects is recorded in the provision for income taxes together with tax credits and benefits received. As of December 31, 2022, 2021 and 2020, the Company recognized $1.8 million, $916 thousand, and $622 thousand, respectively, of proportional amortization as a component of income tax expense and recognized $2.0 million, $1.2 million, and $738 thousand, respectively, in affordable housing tax credits and other tax benefits during the years. The Company’s low-income housing tax credit investments at December 31, 2022 and 2021 were approximately $47.2 million and $24.0 million, respectively, and are included in “Other Assets” on the Consolidated Balance Sheets. The Company’s remaining capital commitments to these partnerships at December 31, 2022 and 2021 were approximately $41.3 million and $19.2 million, respectively, and are included in “Other Liabilities” on the Consolidated Balance Sheets.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company has evaluated the impact of the CARES Act and determined that none of the changes would result in a material income tax benefit to the Company.

On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law and extends several provisions of the CARES Act. The Company has determined that neither this Act nor changes to income tax laws or regulations in other jurisdictions have a significant impact on our effective tax rate.